The Telegraph
Wednesday , June 11 , 2014
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Banks draw up wish list

Bankers attend a pre-budget meeting in New Delhi on Tuesday. Picture by Ramakant Kushwaha

New Delhi, June 10: Bankers today suggested that the government should consider listing the Life Insurance Corporation of India (LIC) and offer better tax breaks for fixed deposits and long-term infrastructure bonds.

Bank officials, who met finance minister Arun Jaitley here today for pre-budget consultations, also recommended the setting up of more asset restructuring companies and 100 per cent tax write-offs for provisions made for bad loans in accounts.

SBI chairperson Arundhati Bhattacharya, HSBC’s Naina Lal Kidwai, Kotak Mahindra Bank’s Uday Kotak, K.R. Kamath of Punjab National Bank and S.K. Roy of the LIC were present at the meeting.

Bankers urged the finance minister to consider doubling the threshold for the deduction of tax at source on interest on fixed deposits to Rs 20,000 from Rs 10,000 .

Kotak said the government should consider listing the LIC so that it could generate more revenues, which in turn could help to widen the insurance market and increase the amount of money ploughed into the financial system.

“Listing of the LIC can be a huge game-changer for the Indian financial system,” he said, adding that Centre can retain control of the insurer by being a majority stake holder.

The bank officials also sought a revamp of the Rajiv Gandhi Equity Savings Scheme and steps to boost financial savings.

Other suggestions included a reduction in time limit and number of adjournments in cases relating to the recovery of bad loans; a budget statement regarding the recapitalisation of PSU banks; and the dilution of government stake in public banks up to 51 per cent.

The implementation of the recommendations of the Naik Committee report, removal of mismatch between asset liability and banks’ balance sheets and the need for revising the definition of priority sector lending also featured in the proposals.